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There was an irrevocable trust set up 5 years ago and assets…

There was an irrevocable...

There was an irrevocable trust set up 5 years ago and assets were moved into the trust. There was no gift tax return done. Should it be filed now.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

Unfortunately the gift tax return was never done, because most of the assets are over 55 years ago and very difficult to get cost basis for them therefore the gift tax return was never filed.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Are there any penalties for filing the gift tax return five years later

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11/1/2017
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,636
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Welcome to JustAnswer! My name is ***** ***** I will be able to assist you today.

The transfer of assets to an irrevocable trust, or to the beneficiary of a revocable trust, is a taxable event resulting in gift tax liability. Depending on the year and amount of the transfer a gift tax form may have needed to be completed. This is due in part because the amount of the annual gift tax exclusion has changed on almost an annual basis. You must file the gift tax return, Form 709, only if you actually owe gift tax.

Under IRC Section 2511(a), gift tax applies whether a transfer is in trust or otherwise; whether a gift is direct or indirect; and whether the property is real, personal, tangible or intangible. Treasury Regulations Section 25.2511-2(b) provides that a gift is complete when a donor parts with dominion and control so as to leave him or her with no power to change the disposition of the property transferred. If a donor reserves any power of the disposition of property, the gift may be incomplete, partially complete or partially incomplete, depending on the facts of the case. .

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I​f there is a penalty it would depend in part on the amount of the transfer into the irrevocable trust. Penalties would include failure to pay and accrued interest on any outstanding tax not paid by the required date.

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I​n regards ***** ***** cost basis, the taxpayer has the burden of proof.

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Customer reply replied 8 months ago
Can the irrevocable trust be dissolved in new jersey

T​he annual gif tax exclusion in 2010, 2011 and 2012 was $13,000. Any gifted amount over $13,000 would require a gif tax return

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Y​es, irrevocable trust can be dissolved or modified in New Jersey

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"a non-charitable irrevocable trust can be modified or even terminated by consent “if the modification or termination is not inconsistent with a material purpose of the trust.” Notably, a spendthrift provision in a trust is not presumed to constitute a material purpose, which means that a modification by consent that could expose the trust assets to claim of a beneficiary’s creditors is permitted.​"

https://njbmagazine.com/monthly_articles/irrevocable-trusts-not-irrevocable/.

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If you have any further questions please let me know.

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Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,636
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Thank you for the rating and please let me know if you do have any additional questions!

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